Payroll warning issued

A great deal of care is taken in most firms to ensure that staff receive the correct take-home pay. Indeed, many companies enrol their personnel on payroll courses and sage courses so they become experts in such issues.

However, a warning has been issued concerning potential inaccuracies. According to John Whiting, tax policy director at the Chartered Institute of Taxation, people should take more of an interest in their personal tax, Sage HR & Payroll reports.He suggested that it is unwise to completely trust the pay-as-you-earn (PAYE) system.

His comments were made in reference to mistakes that came to light last year. In September 2010, it was revealed that nearly six million people in the UK had paid the wrong amount of tax. Around £2 billion was underpaid via the PAYE system in the previous two years. As a result of this, around 1.4 million individuals owed an average of £1,500.Meanwhile, £1.8 billion was overpaid and a total of approximately 4.3 million consumers were thus due a rebate.

The mistakes were identified after a new computer system was installed that allowed more discrepancies to be recognised. Those who had overpaid or underpaid were sent letters detailing the problems. In some cases, tax codes were altered so that the money owed could be recouped gradually the following year.

According to Mr Whiting, payroll professionals, potentially including those who have attended specialist payroll courses and sage courses, need to keep an eye out for potential problems so that any that arise are spotted early. He pointed out that this could save more serious issues down the line.The expert added: “In some ways PAYE is a wonderful system because it does generally give you the right tax bill, but in some ways it is a dangerous system because people assume that it will give you the exact right tax bill.”